Losing the $4,050 Personal Exemption But Doubling The Standard Deduction

As part of the GOP tax reform bill to support President Trump’s tax reform agenda the Personal exemption is being fully eliminated in 2018. This will be reflected when you file your taxes in 2019. The $4,050 personal exemption in 2018 (which was unchanged from 2017) can be taken for yourself, your spouse, and your eligible dependents, will be scrapped. This could mean that single parents or families with lots of dependents could see a higher tax bill as a result, while higher income filers with no kids/dependents will likely fare much better due to their ineligibility for this exemption (income limits) under current law and from the other offsetting tax breaks in the new tax bill.

Several itemized deductions like SALT and alimony payments are also being cut back or eliminated entirely. This is supposed to be offset by the near doubling of the standard deduction, higher income 2018 tax bracket thresholds and increased Child Tax Credit (CTC). The idea is that by increasing the standard deduction and removing several deductions and the personal exemption, tax payers will not need to itemize for claiming extra deductions in their 2018-19 tax returns thereby making the tax filing process simpler and smoother.

Note that the personal exemption was not able to be permanently scrapped by the GOP due to Senate rules but will be suspended until 2025, unless extended by Congress then.

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71 thoughts on “Losing the $4,050 Personal Exemption But Doubling The Standard Deduction”

Yep. This tax reform stole $3000 out of my pocket! What the heck?! I always itemized since owning a house and giving to charities. My itemized is only 23k, which is what it always is and now I am losing out on 16200 on personal expectations for my family of four! So instead of having itemized deduction of 40k it is only 24k! Bunch of crap! I’m so upset!

I haven’t seen any discussion of how taking the new higher standard deduction vs. itemizing might effect the amount of state taxes that you pay. In MD, if you take the standard deduction on your federal return, you must also take the standard deduction on your state return. In my case, my federal standard deduction comes to 13, 600 (over 65 individual). Unfortunately, the state standard deduction is only 2500, so the 11000+ difference becomes taxable income on my state return and I now have to pay 470 in state taxes, whereas all itemized deductions on the federal return can be claimed on the state return and I don’t pay any state tax. You really have to plug in all the numbers on both state and federal returns and see how the combined returns compare. I actually fared better by itemizing, even though my itemized deductions were slightly lower than the new higher standard deduction. My federal return was $84 lower than if I had taken the standard deduction, but my state return was $470 higher, so I still made out better itemizing even though the standard deduction was higher than my itemized deductions. The long and short of it is that I’m paying slightly more taxes this year than last year. My gross income (SS + state pension) went up 1.82% or $775 (cost of living increase) from 2017 to 2018. My total federal tax liability went up $380. So 49% of my gross income increase went to paying federal taxes. My federal return is actually $800+ smaller this year than last, but roughly $500 of that is attributable to smaller withholdings during the year due to the decrease in my rate from 15% to 12%. So I’m paying more all told, but not by a lot. I know that raising the standard deduction to was intended to simplify the filing process, but it didn’t for me. I really had to look at all the possible scenarios before I could tell how I was going to fare better. It boiled down to this…losing the $4050 personal exemption was what hurt me, and the increased standard deduction did nothing at all for me.

We’ll just did my taxes on line and guess what? I got totally screwed! I used to always get a return now with the new tax code I owe! total crap. Who cares if the standard married deduction doubled? I used to get around $19,000 in itemized deductions every year with having 3 kids and wife going to college. Now without the personal exemptions of $4,050 per person ($20250) My adjusted gross income is higher? Who on earth thought of this plan? Does not help married couples that own a house at all with more than 1 kid.

Before you get all hot and bothered, compare what you would have paid. 2 kids here, saved right at $3k in federal taxes vs. what it would have been, using the original 2018 marginal tax rates, standard deduction, exemptions, and child tax credit.

Just did my taxes. Nothing changed with income, deductions (just mortgage interest) and no changes in filing status (no dependents) and my refund is $4500 LESS than 2017!! So certainly hurts single filers with medium income/no dependents.
Stinks for the middle of the road

Your refund is the difference between how much $ was withheld by your employer, and your tax. If your withholdings were low, then your refund will be low, this does NOT mean you paid more taxes.

Our family of 4 saved right @ $3k vs. what we would have paid. The marginal tax rates are lower, the income caps for the marginal rates are higher, the standard deduction is higher (although, the personal exemption went away), AND the child tax credit DOUBLED.

One major point of this law was to significantly reduce the # of people that itemize, which greatly simplifies the paperwork for you, AND the IRS. The number of cheats and scams will be reduced, and the IRS will focus audits on those with lots of itemized deductions (of which there will be far fewer people filing this way).

Why are the combined totals for personal and itemized deductions so much less this year? Last year my overall personal and itemized deductions were thousands more than the new standard deduction provides this year, although I donated much more to charity and had more itemized deductions than last year. The end result is that making generally the same amount of money and giving more away, I have a tax bill for additional taxes that exceeds anything I have had in my life because the new $24,000 standard deduction is false, since it really does away with the $8,000 or so (for 2) personal deduction, the new standard deduction is really only $16,000. A prime example of bait and switch to fool people into thinking there’s a tax cut when really people who cannot give away more than $20,000 or more, get a huge tax INCREASE. It definitely favors people with tons of money who can give away large amounts of cash.

The purpose of eliminating the personal exemption was to find $1 Trillion of tax revenue that could be redistributed to partially help pay for the reduction of the corporate income tax to 21% from 35% and reduction of the higher income tax brackets. The total redistribution of tax revenues was closer to $4 trillion (eliminating personal exemptions, SALT, etc.) .. Congress had to borrow close to $2 Trillion to cover the rest. Many other items were on the table also, but thankfully not passed (i.e. elimination of 401k benefits, tax-free gain on sale of home, etc., but expect those to be on the table on the next round of tax cuts. Don’t expect corporations to beg for elimination of their tax benefits, only individuals must suffer).

The voting public didn’t fully grasp the purpose of the tax cuts as a redistribution of wealth from the individual taxpayers to corporations and wealthy individuals.

Personal Opinion: Money doesn’t care whether a person is republican or democrat. So always follow the money to the individuals responsible. Unfortunately the IRS doesn’t care either, they are funded by Congress.

A single person with itemized deductions of $7000 (Mortgage and prop tax) who contributes $5000 to charities really gets hurt. Before, they would get total Itemized deductions of $12,000 and the $4050 personal exemption for: $16050 in reduction to their taxable income. NOW, They would only get $12000 standard deduction and NO personal exemption…….. a loss of $4050/$4100 to reduce their taxable income(tax increase of $400-$1200 dollars 10-30% tax bracket). Only the portion of the charitable contribution which is over $5000 would be tax deductible(then he could itemize because the total would be over 12,000 the new standard deduction. This means that a single person as mentioned above loses the tax deductibility of the first $5000 of charitable contributions he makes. Is that what Congress meant when they passed this law? I don’t think so, as this will hurt churches and other charitable organizations. Hopefully, this will be corrected before 2018 tax filing season in Jan., 2019.

This is exactly what is happening to me. I had no idea just how screwed I’d be until I filed my taxes (just now). I’m very middle class, with four dependents. I make large charitable contributions, so itemizing deductions is (barely) more advantageous for me. But I’m about to get $5000 less in my tax return. OUCH! Not exactly incentivizing me to be so charitable. Thanks GOP!

My clients had been asking for years “Will the Republicans Repeal Obamacare”, and my reply was always – “Obamacare is a TAX BILL, the Republicans will have a TAX issue if they pull Obamacare.”.. In addition I analyzed the CA & NY Minimum Wage increase laws and the ONLY one’s to make BANK on the minimum wage going to $15 are the politicians. The minimum wage increase will suffice to push people off Government subsidized Heallthcare, and the Government reaps in all the extra payroll Employer and employee taxes. This Republican Tax bill is the Equivalent of giving a five year old a lollypop in exchange for a $20 bill… We gave away Huge Tax Write-offs . In addition, while Standard Deductions Increased average $5,600 Filing Single and $11,300 Joint… The Republican Bill REMOVED the Personal Exemptions $4,100 Single , and $8,200 Joint. As Income increases over next few years we are losing losing losing . UNDERSTAND- The 200 lb Gorilla driving Healthcare Reform and a Major contributor to this TAX bill is Medicare Insolvency and the growing Medi-CAID population. We need to demand an AUDIT on where the 7.65% personal FICA TAX and 7.65% Matching Employer FICA taxes have been appropriated over the years for our pensions and Healthcare AC to be in such a mess. If a private entity did to our AC what Government has done, They would be behind bars. What fools we are !

no you wont be better. You are losing the $4k personal exemption as well. Add that to the 6300 standard deduction. That is 10,350 vs the 12 standard deduction now. So you are basically gaining a 1650 deduction, which is peanuts.

By not getting the 4100 each personal exemption and Not using the itemized deduction due to not being able to claim the state and local tax therefore making our itemized less than the 24,000, we get screwed by not getting the 4100×2= 8200.. so our itemized usually was 25 to 26,000 plus the 8200 personal exemption I now owe 8000 in taxes!! Double what we paid last year and we didn’t make anymore money! How is this a tax break?

I am single, not blind, no dependents and 70. It appears the only deductions I will be able to take for 2018 is the standard deduction of 12000 plus the old over 65 single lady deduction of 1600.00 Total deduction of 13600.00.

I figured out my estimated taxes for 2018…and looks like I just caught a big mistake.
I gave myself the standard deduction of 12000.00 plus an additional 10000..I guess that was for looks. After going through the calculation again it seems all I can legally squeeze out for deductions is the 13600. What do you think??

We will definitely be screwed and paying more in taxes for 2018 tax year. the salt deduction plus mortgage interest is limited to 10 K we had been putting close to 25k on our schedule A itemized deductions to offset our income. the $24000 married filing jointly deduction will lose us a thousand in deduction there which we will start taking instead of using schedule a because of the 10,000 limit. In addition family of five is a $20,200 offset to our income with personal exemptions times 5. Therefore 22000 + 1000 is 23000 more income we will have to pay taxes on next year due to the loss of our personal exemption deduction. In addition our three boys just turned 17 which means we will lose the child tax credit of $2750 which we had used previously to offset our tax liability. I understand this is 3 x $1,000 tax credit but the worksheet reduces it to $2750. We make our money in rental property and had done well in the past although for the last two years we are realizing quite a substantial tax bill compared to years previously with all our depreciation. we make our money in rental property although for the last 2 years we are realizing quite a substantial tax bill compare 2 years previously with all our depreciation. In summary this new tax plan will cause us to pay taxes on an additional $23,000 in income. Please correct me if I am wrong.

I am in exactly the same boat. Increased my w/holdings because I could see the writing on the wall. But, just worked up my taxes, and have to pay $3K in taxes. Last year we received back $4K. This is a huge hit to families.

Ignoring the changes in tax brackets, strictly looking at just the personal exemption, it can negatively impact single filers without dependents, as well. For individual middle income earners on the low end like me with a mortgage who prefer to itemize, under the existing law my tax refund is greater because of the personal exemption. For simplicity sake, if I had currently have $11k in deductions + I claim the $4 k personal exemption, thus my taxable income is reduced by $15 k. Not having the option, I would have to use the double standard deduction instead at $12k, therefore losing $3k in income reductions. Basically, the main tax payers who will benefit by the this change in the new law are those who could not previously itemize or those whose both itemized deductions + personal exemption were less than than double the standard deduction.

Your logic does not register with me. Why would you take $15.000 in deductions when they are giving you $24,000.00 right off the top. I think I would take the $24k and file the simplest return possible. So, according to you comment above you would prefer $15k in deductions verses $24k in deductions. I would seriously reconsider, if I were you.

She clearly stated above that she is a single filer (not married filing jointly) which leaves her with a $12,000 standard deduction in 2018, as she stated. Her math is correct.
I also am not happy with the loss of the personal exemption and the removal of itemizing. I have a family of 6 and we always have more in itemized expenses (medical, charitable giving, mortgage interest, property tax and more) than our standard deduction was. This is going to be a net loss for us as well on those two items.
They did double the CTC which will create an additional $4,000 of credits, assuming I don’t get phased out again.
Overall, I think it will help many people but, as Kelly said, many will also end up paying more with the loss of certain deductions.

I should clarify something. I don’t mean the removal of itemizing but rather the discouragement of itemizing paired with the loss of personal exemptions. This will indeed hit many families like mine that have large itemizing deductions.

they are giving you $8000.00 over what the standard deduction is at this time. It will help out a lot of people who cannot itemize because they are single & no children. I am all for giving it a try to see if I get more than the $400.00 I usually get since I am retired.

The child tax credit is a credit off your taxes or a payment to your if you are at zero owed. The tax credit is not a deduction off of income. If you have two children you have lost their exemption. However $4000 will be deducted from your taxes or paid to you as a refund. For example imagine that you have two children and you would owe $4000 in taxes the two child tax credit will mean you owe nothing. If you have two children and you owe not taxes the IRS will send you a check for $4,000. I understand that this is confusing but remember a tax credit comes directly off of the line of taxes owed and can be paid back if it makes your taxes negative.

You’re an idiot John. Making babies and supporting them until at least they’re 18 is spending more than $4050 per year. I bet if your parents didn’t have kids/kid like you, they will have more money saved back then.

I’m at about 15,000 in itemized deductions including SALT (just under 10K), mortgage interest, donations. I do not have kids. Unless the tax brackets are going to wildly help me I don’t see how losing the personal exemption won’t leave me paying *more* in taxes in the end.

He’s right and you voted to screw yourself so suck it up, Moron. I knew Trump when I worked in NYC. He didn’t take his “City” and he didn’t take his state. That should tell you something but, oh,oh…too late now. You helped elect a narcissistic racist misogynist bankruptcy businessman, an eviction specialist and a constitutional and personal rights ignoramus and and you got screwed. Your end of the lesson.

Read the law, you get a $24,000. dollar deduction. This yr. my standard deduction and personal exemption together was $23,300. Wife and I are both over 65. Because of our age our standard deduction was $2,500 more than a couple under 65. So a young couple with no children starting out would get $12,700 standard ded. plus $8,100 personal exemption for a total of $20,800. So in 2018 they are getting $3,200 more deducted from the AGI. Now, the people with a bunch of kids will probably get hurt by this a little. Maybe they want people to have less kids. he he

YOU KEEP MISSING KELLY’S POINT. SHE WONT RECIEVE THE 24K — SHE’S SINGLE WHICH DROPS HER DOWN TO THE 12K STANDARD. She had 11k in itemized prior plus her exemption. No kids for child tax credit. She will have more taxable income in 2018.

John, there are NO personal exemption in 2018. AND not every one is a two (couple). Single individual, will have a standard deduction of $12K. that is it. So even if they itemized and have $15k in deductions, that is $3k more than standard so they will take the itemized number. However, since there is NO $4k (ish) personal exemption, they will pay taxes on $4k more of their income. If the exemption were still in place, they would have reduced their taxable income by the $3k above standard deduction, plus the $4k exemption, for a total of $7k which is clearly more than the $3k reduction per the new law.

I can’t see how losing the exemption deduction and getting a 10K addditional allowance for the standard deduction will help anyone but the 2 person family. If they itemized they will get murdered with a straight loss of the number of exemptions allowed. a family of four would have to pay tax on $16,200 , how is that a tax break. If they have removed the exemption deduction it will suck for a lot of the middle class. I can see why the democrats say this law is crap but they agreed to it because it will kill Trump and the Republicans at the polls.

The bottom line is no group should not have to subsidize large families. If u do not want to pay more in taxes stop having multiple children and be responsible
Nobody is stopping u from having a large family just no tax benefits for doing so

See this is the short sighted thinking that will end up hurting you more because of your immediate selfishness. Those children that you “don’t want to subsidize” now will end up paying taxes and subsidizing everyone else in the future. Your 1.2 children will add less to the economy than their 5. People are so focused on their tiny little tree that they miss the redwood forest. To be clear I’m talking in relation to the loss of the exemptions that is only giving a proportional amount of tax savings for the number of people you are supporting. This is the exact thing that will end up most hurting those that Trump claims to be representing. You have a family that typically itemizes up to $19,000 and has three kids. After the changes they will end up losing $11,200 in deductions. For having three kids. Wow, they didn’t plan that well *sarcasm*

I think you did the math wrong, above. The family that typically itemizes $19,000 will now get the standard deduction of $24,000, and increase of $5,000 in that area. They lose the three personal exemptions ($4050 X 3 = $12,150. So their net loss is: $12,150 – $5,000 = $7,150. Not nice, but not $11,200. Now how much of that is made up for with the revised brackets will vary from case to case.

You all are leaving out a huge key to this plan. The child tax credit was increased from $1,000 to $2,000. This money is taken off of your tax liability, not off your AGI. Using the family above (2 parents 3 kids) and a 10% income tax rate (for simplicity purposes) this is what you will get.

There may be some situations where people without children may lose out however, I NEVER was able to itemize when I was single EVER. Doubling the standard deduction should help most people and you can still deduct things off your tax liability via credits for other things. I have always been able to deduct my student loan interest without itemizing.

The current tax law states an individual can be claimed by the taxpayer if the taxpayer providers more than 50% of the individual’s support AND the individual earns less than the standard exemption amount ($4,050). What will the new amount to be able to claim an individual who resides with you and is supported over 50% by you?

One parent with two dependents. The deductions for 2017 would be head of household $9,350 plus three exemptions of $4,050 each. Equals $21,500 in deductions. For 2018 they lose the exemptions and the standard would be $18,000. Add back $2,000 for the two kids (2017 $1,000, 2018 $2,000) and you still have a deduction loss of $1,500. On a 15% tax rate and that’s additional tax of about $200. This is a tax increase for everyone except those that are lower income with no dependents or income so high that they phase out of itemized anyways.

While I’m not a fan of the tax bill because it will ultimately increase the deficit, you’re numbers are a bit off. The $2,000 that you added back for the two kids is a tax credit — not to be confused with a tax deduction. In your example, of a 15% tax rate, each $1,000 of tax credit is equal to approximately $6,666 additional tax deduction. You would actually have a tax deduction of $31,332 instead of $21,500.

I’ve been calculating the differences as well and I see this new tax bill not a benefit but an increase in taxes in 2018 as well. Yes, I went down in the 12% tax bracket, I’ll file head of household with 2 dependents with the higher standard deduction increase for 2018 , BUT I lost my personal exemptions. Having the standard deduction increase and a tiny 3% decrease in fed taxes, and the increase of 400 child credit per child does not make up the personal exemption loss. And my understanding of the child credit is that we are only refunded up to 1400, not 2000 per child? That is not totally clear to me, regardless, I see this meaning I pay more which sucks but great for the rich.

You are being blinded by partisan b.s. It’s not “great for the rich,” what is with the class warfare people keep spouting off about. Fine, you abhor people who make more $ than you, boo hoo. Now, let’s stick to facts:

The child tax credit doubled, to $2k. Only $1.4k is refundable…what that means is that if you pay ZERO tax (note, this is NOT the same as not owing money at the end of the year…), they will only send you $1.4k per kid. IF you paid taxes (more than $600/kid), you will get the FULL amount. The TAX you pay, before any credits is on line 11 of your 1040. If you have 2 kids, and line 11 shows >= $1200, you will get the full $2k credit per kid.

Refundable just means if you net 0 or less in taxes for the year, they will send you a check for the credit. Non-refundable means it can only be used to reduce your tax liability, but no lower than $0.

With so many single parent families today, the chance that they might be paying a higher tax bill hardly seems to be a good thing. With the hoops that many jump through to make ends meet, it doesn’t seem
reasonable that to “make it easier to file” would be a choice made if it meant higher taxes. A strong family
has always been the underpinning of a strong country, yet this does not seem to help many families. Considering the falling birth rate, large families are an asset to the country.

“This could mean that single parents or families with lots of dependents could see a higher tax bill as a result, while higher income filers with no kids/dependents will likely fare much better due to their ineligibility for this exemption (income limits) under current law and from the other offsetting tax breaks in the new tax bill.

This part of the bill is a big mistake if I understand what has been described in the paragraph. I hope there
is some way that these families have some way to work around that increase.

Considering that currently about 72% of taxpayers file using the standard deduction, the near-doubling of the standard deduction, adjustments to the tax brackets, and doubling of the child tax credits in the GOP proposal will benefit many of that remaining 28% who do currently itemize. We’ve actually entered the numbers to see how it turns out for specific taxpayers — It’s difficult to come to any conclusion about the impact to a taxpayer without actually entering the data and seeing how it calculates out.